Analysis & Optimization of Inventory of Low Value items based on ABC–VED

Abstract

Inventory control in modern Industry is a challenge due to application of wide range of materials. A most important inventory control technique ABC analysis demonstrate that C class items are available in majority approximate 70% of the total volume. Its a challenge to optimize the stock of all such items to prevent sale lost and improve the service level . So Selective Inventory Management (SIM) is an effective for determine cost-effective inventory control in an organization. It enables to focus on few important control points so that with limited control efforts very significant outcomes are realized. This need is felt in management of inventory because the numbers of different items or stock keeping units (SKU) in most organizations are too large. It easily runs into thousands or even hundreds of thousands of different SKUs and giving equal attention to management of inventories of each SKU may be very counter-productive. Whenever cost of control is higher than the benefits of control; the control becomes ineffective. Hence SIM becomes important if design of cost-effective inventory control is the objective.